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Goodbye 2012

December 31, 2012

Well it’s New Year’s Eve, a time to look back over the past year and anticipate events for the next. I recall back in May 2010 when the Coalition was formed that there was a frequently aired view that the first couple of years would be very tough for the government and with we Liberal Democrats likely to feel the brunt of any public anger. But we comforted ourselves by thinking that by the end of 2012 the worst would be over as the economy was bound to be on the mend and government finances clearly under control. The Queen’s Diamond Jubilee and the Olympics would give people a feel good factor and memories of economic troubles of the previous four years would fade.

Like many plans that rely on forecasts they don’t turn out as expected and with hindsight were wishful thinking. There was indeed an enjoyable long weekend for the Queen’s 60th year on the throne (though it poured with rain so maybe that dampened celebrations!) and the Olympics and Paralympics were massive successes. Tick feel good factor.

But the economy has bumped along, with small spurts of growth interrupted by contractions. The dire warnings of doom from Labour have certainly not come true. But the healing process for UK plc is taking a long time. One key economic indicator definitely went in the right direction in 2012 – unemployment (including youth unemployment) has fallen steadily. The number of people in work is now at an all time high. UK unemployment is considerably lower than the Eurozone and on a par with the USA.

The public finances are also in better shape. The deficit has fallen from about 11% of GDP in 2010 to just under 8% now. This gives the UK a good credit rating and cheap borrowing from international markets. Despite the fact we still have the biggest deficit of a major economy we are able to borrow at close to German interest rates. But outside the finance press, this goes largely unreported and seems to have little impact on public opinion.

We need a clearer way to explain the progress we’ve made and why it matters. Whenever I’m giving talks I say that in 2010 Britain was like someone trying to enjoy a £40k lifestyle on a £30k income. You know you have to sort out the problem or your creditors will jack up the rate of interest and you’ll have to find new sources of credit. I guess now we’re a nation spending about £38K and making £31K. Better, but still a long way to go. But the progress means low interest rates, releasing more money for services.

And the Lib Dems? Well I don’t detect an internal feel good factor! But the despair and predictions of doom and gloom that characterised 2011 have certainly faded. Party poll ratings have steadied (though daily internet polls flatter UKIP) though Nick Clegg still receives (unfair) awful ratings. Real elections are more mixed. Parliamentary by elections are clearly a lottery and no good prospects have been fought. Local government results, week after week, offer a better picture, with the party performing much better. But again, this gets little comment.

So personally I think the country is in a better place than a year ago but it’s not immediately obvious to people. My party likewise. But if the Liberal Democrats are to see a political revival in 2013 then the economic revival will have to be clear to everyone.

2 Comments leave one →
  1. January 2, 2013 11:50 pm

    I’m surprised you didn’t take this opportunity to start rowing back a bit.

    Admit it: Osborne’s Plan A has failed miserably and is causing untold misery for the lowest income households. What’s Plan B?

  2. January 6, 2013 10:27 pm

    Well it’s more mixed than that, surely? I’ve said not everything has gone as the govt thought. Yes things are hard for people on low incomes, which is why I’m glad the Lib Dem policy of £10k tax free income is almost a reality.

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